Blue Cross and Blue Shield of North Carolina (BCBSNC) is the largest health insurer in North Carolina serving more than 3.7 million customers. As a not-for-profit, fully taxed company with headquarters in Chapel Hill and 4,600 employees, their network of health care providers includes 92% of the medical doctors and 99% of hospitals in the state. They hold the highest level of NCQA Accreditation and CEO Cancer Gold Standard Accreditation. They also won numerous awards and recognition including Top 60 Companies for Executive Women (2010), Top 100 Best Company for Working Mothers, AARP Best Company for Workers over 50, and Diversity Inc. Top 25 Noteworthy Company (2009). In 2010, BCBSNC initiated a culture change process. Why did they do it and how did they do it? To learn more about the organization’s journey and its plans for the future, read our latest case study, A Culture Transformation: Blue Cross Blue Shield of North Carolina.

1. Volume 6, Issue 3, 2011
casestudy
Blue Cross and Blue Shield of North Carolina: “Sailing Through the Perfect Storm”
At a Glance
Business Challenge
Facing a perfect storm...
In early 2010, BCBSNC was facing both
Business Challenge external and internal challenges, which
• External challenges: Fara Palumbo, Senior Vice President and
Increased healthcare Chief Human Resources Officer, described
costs, changing as “a perfect storm.” Externally, they were
legislation, and growing dealing with increased healthcare costs, Blue Cross and Blue Shield
economic pressures legislation, and economic pressures. of North Carolina (BCBSNC)
• Internal challenges: Internally, they had recently transitioned is the largest health insurer in
New leadership team, to a new leadership team: J. Bradley North Carolina serving more
new business strategy, Wilson, the new CEO and former COO of than 3.7 million customers. As a
changing business the company, was appointed in February not-for-profit, fully taxed
conditions 2010. Six (out of nine) senior leadership company with headquarters in
team members had been in their current Chapel Hill and 4,600
Solution leadership positions for less than 3 years. employees, their network of
• Implemented the health care providers includes
Denison Organizational To address the growing challenges, the 92% of the medical doctors and
Culture Survey new management team redefined the 99% of hospitals in the state.
• Created a shared vision and developed new strategies for They hold the highest level of
sense of vision the organization. The new vision was NCQA Accreditation and the
• Clarified and “To be a leader in improving the health CEO Cancer Gold Standard
communicated the care system in North Carolina,” and to Accreditation. They’ve also won
CEO’s legacy focus on the actions needed to improve numerous awards and
• Involved the entire the overall system and to better serve recognition, including: Top 60
organization in the their customers. Companies for Executive
change process Women (2010), Top 100 Best
• Used simple visuals Companies for Working
that internalized the “We’re in a period of Mothers, AARP Best Company
culture change model considerable change at Blue for Workers over 50, and
Cross and Blue Shield of Diversity Inc.’s Top 25
Results North Carolina – as much Noteworthy Companies (2009).
• Improved culture change as we’ve ever
scores attempted at one time.”
• Improved business – Fara Palumbo,
performance metrics SVP and Chief HR Officer
• Positive work
environment
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2. Changing culture, changing business
To continue to be successful and address the increasing challenges, the company needed to make some deeper changes by
concentrating on their culture: BCBSNC decided to focus on their employees to ensure that their goals were aligned with the
company’s strategies, mission and vision. To achieve this goal, BCBSNC needed a better understanding of its employees’ core
beliefs, assumptions, and perceptions of the corporate culture.
BCBSNC had considered the human components of business in the past. In fact, BCBSNC had been measuring employee
opinions for several years. However, there was only a limited link to business goals. While business results were strong, the
company’s leadership saw a pressing need to connect the company’s culture and direction with the rapidly changing needs of
the market.
The Denison Model of organizational effectiveness provided BCBSNC with the proper framework to connect employee
engagement with their culture to support the company’s direction.
Solution
Figure
1:
BCBSNC
DOCS
Results
2010
Identifying Cultural Strengths and Weaknesses
In May 2010, 3,592 BCBSNC employees completed the Denison
Organizational Culture Survey. Figure 1 shows the survey results.
The 2010 survey results helped clarify several key strengths, including:
1. Quick reaction to issues
2. Business with a conscience
3. Clear definition of short-term goals and objectives, and therefore a
good understanding of their targets and a way to measure the results
However, the survey also highlighted some significant stumbling blocks.
“The Denison results were a wake-up call. The results showed that
“people didn’t understand where we were heading,” commented
Palumbo.
Indeed, survey data revealed key disconnections between leaders and
employees, and among top leaders that were hindering performance:
• There was misalignment between leaders and employees regarding
the company’s strategies, mission, customers and marketplace
• There was also misalignment between the Senior Leadership Team
and upper management at the VP level about the organizational culture
The survey also uncovered a number of additional issues:
1. Issues with delegation of authority, empowerment, and the decision-making process
2. Tendency to be more reactive and conservative in relation to the industry and its customers
3. Working in silos, which led to limited coordination and integration, less than optimal efficiency, workflow snags and relatively
high costs
4. Short-term focus versus long term vision threatened the company’s future business potential
Steps Toward Success
BCBSNC took the following steps to create success:
1. Planned the culture change
2. Improved communication by sharing the survey results at all levels of the organization
3. Created a shared sense of vision by clarifying and communicating the CEO’s desired legacy
4. Created an ongoing cross-functional team to address key culture, engagement and communication shortfalls
5. Involved the entire organization
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3. First, BCBSNC’s internal HR/OD function worked with the The Way Forward (Figure 2) visually reflects the culture change
Senior Leadership Team to lead the planned change effort. In efforts and highlights the importance of involvement. It is a way
feeding back the survey results, the group decided to focus on for the Senior Leadership Team and the CEO to clarify
the weaknesses identified--while leveraging the strengths--when their cultural beliefs, to identify the changes that needed to take
sharing the data with the top 100 leaders. They also place, to state the expected actions, and to show their
developed the action planning, communication, and accountability. For example, senior leaders to directors held
accountability processes that would convert survey results into Leadership Team Culture Meetings where divisional leadership
action. For instance, the senior leadership team believed they teams developed Culture Action Plans. Leaders also started to
needed “to own” the culture change and to that end, supported acknowledge accomplishments and supported small wins to
informal leaders who served as role models by taking the create a more positive environment. The Way Forward image is
initiative for various change efforts. designed to quickly and intuitively transmit the link between the
Figure
3:
The
Culture
Compass
individual employee to the company’s overall direction.
Second, they shared the survey results with BCBSNC
employees at all levels of the organization via their intranet.
Doing so, they increased the transparency and openness of
their communication. This also prompted conversations
between employees and leaders, and made leaders more
accountable. As culture became a topic of conversation, people
started thinking more about high-level (e.g., organizational)
goals, vision, and mission.
The tipping point of BCBSNC’s change process was when the
new CEO Brad Wilson shared his desired legacy with the
Senior Leadership Team--an acknowledgement that helped
consolidate a shared vision at BCBSNC. Wilson remarked, “[my]
legacy is...that I truly changed the culture of this organization.”
To ensure employee input, Wilson engaged internal Employee
Network participants to gather important feedback about what
brought them to the company and what they hoped to see in
the future. The information they gathered became a critical
factor in the cultural attributes that would define the
organization. By leveraging Wilson’s personal mission as CEO,
BCBSNC connected employees directly to the organization’s
direction and created a sense of shared vision.
Finally, BCBSNC also created the Culture Compass (Figure 3), a
The company created a cross-functional Strategy and Culture tool to help guide, align and involve the entire organization in the
Communications Team responsible for communicating the culture transformation process. The Culture Compass includes
survey results and focus areas, as well as coordinating and four cultural attributes – Committed, Creative, Collaborative, and
encouraging corporatewide culture change efforts. The team, Caring – that direct BCBSNC’s culture and strategy.
affectionately known as the “culture club” grew to include
representatives from HR, Corporate Communications, To further clarify and communicate his vision consistently, a
Strategic Development and Sales & Marketing. With video of the CEO describing his vision for the company was
empowerment and encouragement from senior management, developed and distributed to the entire organization. Wilson
the team developed the overarching concept for BCBSNC’s wanted to ensure clarity of the message at every level of
Figure
2:
The
Way
Forward
culture and direction: The Way Forward. the company.
Teams then participated in the culture change process in
different ways. Every department developed its own culture
change plans/strategies, while keeping the high level message
consistent. The Marketing department, for instance, started
an all staff stand-up meeting every morning. Healthcare began
selecting a Story of the Month within the group.
Individual employees were involved in the culture transformation
in various ways – including making time for the culture change,
taking initiatives, sharing stories about the 4C’s (of the Culture
Compass), finding creative ways of doing their job, and using
more positive language. The 4C’s have become a common,
accepted and expected part of employee’s communications and
conversations.
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4. Results
Measuring success:
In June 2011, BCBSNC administered another organization-wide culture survey (Figure 4) and the culture scores increased for all traits
Figure
4:
BCBSNC
DOCS
Results
2011
Figure
5:
BCBSNC
DOCS
Score
Change,
2010
to
and indexes (Figure 5).
2011
Culture
Change
of
BCBS-­‐NC
Mission
70
Consistency
DOCS
Score
(in
percentile)
60
Adaptability
50
Involvement
40
30
2010 2011
Despite the weak economy and high healthcare costs, BCBSNC continued to hold its own in the marketplace and to remain a pillar of
stability and reliability. They were recognized by former President Bill Clinton as one of the best organizations in the health care industry
and nationally as a leader in addressing health care system transformation.
In addition to business improvements, BCBSNC also made other positive organizational changes by strengthening the role of HR/OD,
making it a true partner in shaping the company culture and direction. The Senior Leadership Team members became more engaged
with each other. The team members worked more effectively and efficiently as a team when solving organizational problems. Moreover,
the gap between the Senior Leadership Team and the VP team has been reduced considerably.
Finally, the attitude towards problems has changed. Issues are framed and addressed in more positive and constructive ways. For
instance, when a leader faces performance problems, he is asked “how can we help [the leader] improve and get better?” rather than
solely focusing on the negative.
Moving forward
Based on the 2011 survey results, BCBSNC identified the following as areas to focus on: strategic direction and intent, decision making
and empowerment, capability development, and creating change. They feel it is equally important to focus on their strengths while also
managing weaknesses to obtain even better results.
BCBSNC acknowledges that culture change is a slow process and requires continuous efforts. Since the last survey, BCBSNC has
already made significant cultural transformation. They have consistently engaged all the levels of leadership with teams, established
rewards and recognition programs to support The Way Forward, and incorporated culture into leadership development. They are
working diligently on closing the gaps among individual contributors, based on their success in decreasing the gap between the Senior
Leadership Team and the VP team in 2010. With their continued commitment to improving and managing culture, BCBSNC will sustain
their high performance organizational culture and remain a leader in the market.
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